Disclaimer: The information provided by Dirt Legal is for general informational purposes only and does not constitute legal or financial advice. Please consult your CPA or attorney for guidance on all financial and legal matters.
As a 25% tariff on imported vehicles and parts takes effect this week, the auto industry is bracing for the impact and potential unintended consequences.
Automakers are likely to pass some of these added costs onto consumers—though BMW plans to hold prices steady for now, Ferrari has already announced price increases, Car and Driver said.
As a result, new cars are expected to become more expensive. This shift will likely create added pressure on the used car market, as buyers are priced out of new models, supply tightens, or both, according to Car and Driver.
“Used car prices could take a hit as well, if prospective car buyers balk at higher costs for new cars and bid up the prices for cheaper pre-owned ones,” NBC News said.
The used car market typically depends on a steady stream of lightly used vehicles returning from leases over the past few years—years marked by low production and sales, Cars.com said.
With limited supply and rising demand, prices are expected to climb. However, used cars will still generally remain more affordable than their new counterparts, according to Cars.com.
The uncertainty surrounding tariffs is prompting consumers to accelerate their vehicle purchases, leading to increased competition and higher demand for a limited supply of used models, according to Car and Driver.
While the tariffs are designed to support U.S. manufacturing by encouraging consumers to buy American-made cars, vehicles produced in U.S. factories will still be impacted. This is because no car is fully American-made, CNN said.
Last year, all 10.2 million cars built in U.S. factories contained a significant number of imported parts, primarily from Canada and Mexico.
“Industry experts estimate that the parts tariffs alone could increase production costs by $3,000 to more than $12,000 per vehicle for cars assembled at US plants,” CNN said.
Analysts say the auto tariffs could drive up used car prices over time by boosting demand for those vehicles as new ones become out of reach for many buyers. Additionally, insurance premiums may increase due to higher repair costs, The New York Times said.
Stay in the know—subscribe to our newsletter for the latest updates!
Dirt Legal transforms vehicle registration for everyday drivers with digital, hassle-free, and time-saving solutions so you can keep your wallet happy and your vehicle 100% road-ready.
Shift Gears, Elevate Every Mile—Join us for tips that enhance your lifestyle.